As many of you are aware, over the past weekend the federal government took over control of Freddie Mac and Fannie Mae, the biggest players in the mortgage field in this country. Their main role is to buy up mortgages from banks on the secondary market and package them together as investments. The government felt that public concerns, real or perceived, concerning these two entities could bring about a collapse of the mortgage market. Thus they stepped in to take them into conservatorship to make the public confident about both of these organizations. With that in mind, today 9/11/08 Freddie Mac reported that average mortgage interest rates have plunged to the lowest levels in weeks. Nationally the average mortgage interest rate for 30 year fixed-rate mortgages was 5.93% (5.96% in the southeast), down from 6.35% a week ago. The average interest rate for 15 year fixed-rate mortgages was 5.54%, down from 5.90% last week. A year ago the 30 year rate was 6.31%.
Freddie Mac vice-president Frank Northaft said, "...the monthly principal and interest payment on a new $200,000 loan is over $76 lower than a month ago." Lower interest rates make more buyers eligible for home loans. And with prices remaining depressed, this is a one-two punch for buyers again. If you remember I mentioned this back in May of this year. Normally when interest rates are down, prices are up. And when interest rates go up, prices go down. We are again in a situation where BOTH interest rates and prices are down. A good time to buy if you can.
These drops come at a good time and should help counteract the news from the National Association of REALTORs that July's pending sales were down 3.2% from June's figures. Because of lower rates it is being reported that refinancing activity is picking up. Must be a lot of people trying to get out of those adjustable rate mortgages (ARMs) and into fixed-rate loans. Makes sense if they can do it. Personally, I have never been a fan of ARMs. It will be interesting to see if this downward trend in interest rates continues into next week. We hope so.
If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.
If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be, should you decide to finance a home purchase.
John Elwell - REALTOR
Bill Nye Realty, Inc.
Licensed in Florida